Mar 16, 2005This article was originally published by RFID Update.
March 16, 2005—The upcoming legal battle between the old adversaries was characterized as nothing less by Imperial Capital's Vice President of Research, Kevin Starke. With both Intermec and Symbol coming off years of successfully prosecuting a slew of patent cases (Intermec for its smart battery, Symbol for its laser-scanning), their legal teams are seasoned and primed for an all-out brawl.
The import of this case’s outcome for the near-term development of each company’s RFID fortunes cannot be overstated. It will serve as a test of whether Intermec’s intent to charge royalties for use of fundamental RFID technology will succeed. Many believe that it will. Intermec’s portfolio of 100-plus RFID patents is reportedly tight and defensible. (As it should be, given that the original author was patent powerhouse IBM, from whom Intermec obtained the patents in a deal dating back to the mid-90s.)
But despite this strong position, the stakes for Intermec are huge. A failure to realize value from its RFID patent portfolio, in which it has invested dearly, would be devastating. “The stock price would halve,” says Starke.
Symbol, on the other hand, will fight hard to prevent paying Intermec ultra-steep 7% royalties on its line of RFID products. Such fees make the overall prospect of competing in RFID substantially less attractive, and Symbol already has a lot invested in being an RFID leader: namely, $230 million for the September, 2004, purchase of Matrics. The Matrics acquisition notwithstanding, Symbol simply must be a player in RFID if you accept, as most do, that RFID will ultimately replace the company’s cornerstone technology, the barcode.
Patent cases are notoriously hard to predict, but whatever happens, this much is certain: the outcome of this case will affect not only Symbol and Intermec, it will reverberate throughout the entire industry. Readers would be advised to follow it closely.